Suit concerning alleged Puna land scam goes forward
A civil lawsuit alleging a company and three individuals sold undeveloped land in Puna to Japanese nationals under fraudulent pretenses and at inflated prices will go forward, at least for now.
On Thursday, Hilo Circuit Judge Greg Nakamura denied a motion by Benfact U.S.A. and its principals, Hiroshi Yamazaki, his wife, Katsuko Yamazaki, and Hiroshi Yamazaki’s son, Hisashi Yamazaki, to dismiss the suit. The action brought by Toshiko Nishio, Yumiko Motoda and Tadao Motoda, claimed they were “deceptively induced” into buying vacant parcels in Hawaiian Beaches, Hawaiian Shores and Hawaiian Acres subdivisions.
Andrew Daisuke Stewart, a Honolulu attorney representing Benfact and the Yamazakis, argued the contracts between Benfact and the plaintiffs had a forum selection clause specifying any litigation arising from those contracts would be heard in a Japanese court.
The judge ruled since the contracts are between the plaintiffs and Benfact, which is a U.S. corporation registered in Hawaii, and the Yamazakis are not parties to the contract, Hawaii courts are the proper forum for the lawsuit. Hiroshi and Katsuko Yamazaki are Japanese nationals, while Hisashi Yamazaki is a U.S. citizen and Puna resident.
The parties to the lawsuit weren’t present at the hearing.
Stewart said afterwards he thought the judge’s ruling “could’ve gone either way,” but still thinks the suit should be heard in Japan.
“That’s what’s in the contract,” he said. “The contract was in English and Japanese and regardless of the circumstances, nobody’s hiding the ball. I think there’s a strong argument and the case law is full of language by Hawaii courts and the U.S. Supreme Court saying that unless there’s a real overarching public policy interest against enforcing the clause, these clauses usually should be recognized.”
He said the ruling could be a basis for appeal later, and added for now, discovery of documents and depositions of parties and witnesses will continue.
“There may be a settlement somewhere along the way but we haven’t gotten there yet,” he said. “By going through discovery, you know more about the strengths and weaknesses of the case and we’re still going through that.
“I think there’s a lot that we don’t know, a lot of contracts, deeds and documents. The burden of proof in a criminal case is ‘beyond a reasonable doubt.’ In a civil case it’s ‘preponderance of evidence’ — except for fraud, which is ‘clear and convincing evidence,’ which is somewhat in the middle. It’s a higher standard than preponderance of evidence. The burden’s on them, and they have to show that there was intent on the part of the defendants (to defraud).”
Bill Heflin, the plaintiffs’ attorney, said the case will proceed and “I think we can prove our allegations in court.
“It looks like … (the individual defendants) have all agreed that they are not licensed real estate agents in the state of Hawaii, and that Benfact U.S.A. is not a licensed brokerage,” he said. “Notwithstanding that fact, they did assert a choice of forums defense in a real estate contract that was specifically a real estate agency contract. … I think that goes a long way toward proving our unfair or deceptive trade practice and/or fraud case, in that these people have now admitted, it appears, in their legal pleadings that they’re not licensed, but they assert … that there’s an agency contract.
“Additionally, we have as an issue that Benfact U.S.A. … was acting as an agent to sell a property that they owned, which is against the fundamental basics of agency law.”
Email John Burnett at email@example.com.